Pravin (Associate) (127 Points)
03 July 2010Dear All,
Advice on the following
Promoter of Pvt. Ltd. Co. has opened a new company in Singapore with one percent share given to a local director of singapore. This was done about 9 months back. Is there any legal violation as he has not informed any one of this. Are there any compliance requirements, what are the issues that can be there.
Regards,
Pravin
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 07 July 2010
Dear Mr. Pravin,
Individual resident in India can make investment in foreign securities by drawing Forex under libralised remittance scheme upto USD 2,00,000 per financial year for acquiring shares as investment subject to declaration to Authorised Dealer at the time of remittance of funds.
An Indian Party (Firm and Company) may make investment in Share of Foreign Company by complying with the conditions/reporting requirement of FEM (Transfer and issue of foreign Security) Regulation 2000.
Further, the person resident in India has to report the statement of affairs and details of foreign Secutity to RBI in form APR annually.
I understand that your client had to fail to comply with the declaration (form ADI) at the time of incorporating Company outside India and have to comply with yearly reporting requirement (Form APR). Failure to comply may result in penalty upto 300 % of the amount involved.
Regards
Juzer Sadikot
Pravin
(Associate)
(127 Points)
Replied 08 July 2010
Dear Mr. Juzer Sadikot
As per my understanding, investment made by resident individual in foreign securities is permissible capital account transaction under regu. 3 (1) (A)
And only firms/corporate entity require to file form ODA for making investments in JV/ WOS in foreign countries. Apart from this annual disclosure need to be made by these entity.
Pls correct me if wrong.
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 09 July 2010
Dear Pravin Sir,
I would suggest you to read carefully text of FEM (Permissible Capital A/c. Transaction) Reg 2000 [specially Regulation 3 and regulation 4], FEM (Transfer and Issue of any Foreign Security) Regulation 2000 [Regulation 3] and Master Circular No. 5/2009-10 [para A13 and Annex 3].
Please share your conclusion.
Regards
Juzer
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